Burlington's City Council plans to pick a final candidate to buy Burlington Telecom next Monday, following a last-minute delay.

The council's vote will mark an important moment in the yearslong saga that has ensnared the city's internet, phone and service provider.

Why does the city need to sell Burlington Telecom in the first place?

The company ran into financial problems shortly after rolling out telecom service in 2006. In 2007 and 2008, then-Mayor Bob Kiss and Jonathan Leopold, the city's financial chief, borrowed nearly $17 million in cash to keep the utility afloat without telling the City Council. Earlier that year, the city had entered into a refinancing deal with Citibank.

In 2011, Citibank sued the city for $33 million after Burlington ended payments on a lease agreement. In 2014, Citibank and the city of Burlington settled. The settlement agreement says, among other things, that Burlington would pay the bank $10.5 million. The settlement agreement also says that the $10.5 million is intended as a bridge to the eventual "arm's length" sale of the company to a private entity. Citibank will receive 50 percent of what the city gets.

It's complicated. In 2014, Burlington agreed to sell the utility's assets to Blue Water Holdings, LLC, in order to finance the Citibank settlement. Blue Water is a local company owned by Trey Pecor, who also owns the Lake Champlain ferries and the Lake Monsters baseball franchise.

Pecor's company leased back the utility's assets to the city and allowed Burlington's government to be the one to direct the sale to a qualified purchaser. But there's a deadline: Under the agreement between Burlington and Blue Water, the city has to sell the company within four years, or they lose the right to pick the buyer.

In mid-October, the City Council picked a local co-op founded with the purpose of buying Burlington Telecom and a Canadian company, Ting, as finalists. In doing so, the city eliminated Indiana-based Schurz Communications.

People pack Contois Auditorium for the Burlington City Council meeting on Monday night, Oct. 30, 2017, for public comment before the council voted on their choice to buy Burlington Telecom. (Photo: RYAN MERCER/FREE PRESS)

Keep Burlington Telecom Local is a group of residents and Burlington business owners. The board features a financial analyst and lawyer, among others. Burlingtonians began the co-op in response to the news that the city would sell the telecom.

A fourth bidder, ZRF Partners, was eliminated after the mayor and Terry Dorman, who runs an consulting firm that has overseen the telecom's operations and who is working on the sale process, raised conflict-of-interest questions. The withdrawal caused a rift to emerge between some councilors and the mayor.

The Burlington Telecom Advisory Board, a group that consists of four city councilors and four non-councilors, received eights bids in total. Four were eliminated before reaching the council. Their identities were not made public because of non-disclosure agreements.

What is Keep Burlington Telecom Local offering the city?

The co-op has listed a number of benefits in its letter of interest, including promised investments in local tech initiatives, but the overarching benefit supporters point to is local ownership. The co-op has also promised patronage refunds to members, which board members say would help keep money circulating in the community. Residents who are members would also get a say in the future of the company.

Ting, like the co-op, has promised investments in local initiatives. Their offer has a higher cash value than the co-op. Ting is offering a total of $30.5 million. The mayor, a strong supporter of the Ting bid, also has pointed to the company's promise to turn Burlington into an operational hub, which he says could bring jobs and additional money to the area.

Buy Photo

Ting CEO Elliot Noss, one of two bidders remaining a potential buyer of Burlington Telecom, speaks during public comment at the Burlington City Council meeting Monday night, Oct. 30, 2017.(Photo: RYAN MERCER/FREE PRESS)

The final sale will have to be approved by the state Public Utilities Commission, formerly known as the Public Service Board. The commission will evaluate at least eight criteria, including financial stability, technical expertise, ability to obtain financing and customer relations.

Some councilors have said that their understanding of the 2014 agreement with Blue Water means the company can veto the co-op choice because it is not an established telecom provider. Others have said the wording around "qualified purchaser" is vague.

Citibank has also threatened "immediate litigation" if the co-op is chosen, since the bank ends up with much less money.

Elliot Noss, the CEO of Ting, has said that he does not plan to re-sell Burlington Telecom if his company gets to buy it. At last Monday's council meeting, he promised that any potential buyer would have to share certain values and would be bound by the agreements his company and the city worked out.

The co-op's supporters have pointed to their bid as a way to keep the telecom company locally owned forever. A co-op model would give their subscribers a voice in the future of the telecom.

The legal language for a final bid is yet to be entirely finalized, but would include an "anti-monopoly" clause, preventing the buyer from selling to a company if that theoretical sale would result in a telecom company owning the majority of the market.

Contact Jess Aloe at 802-660-1874 or jaloe@freepressmedia.com. Follow her on Twitter @jess_aoe.